The Hindu Business Line : Your TV as your bank

As banks reap the benefits of non-branch service delivery channels that came of age in the recent past, their quest to expand reach via innovative offerings never ceases.

Banking services made available via television has been one such innovation that attracted significant attention a few years ago, but it was a case of early delivery for most countries.

Banking on TV was aggressively launched in the Latam and European region between 1999 and 2001. Many banking industry analysts initially wrote off this mode of service for advanced geographies, citing the bright future of Internet/PC paving the way for Internet banking as a preferred option over television. Even today, when almost a third of the top 20 European banks offer some form of interactive TV banking, the slow initial uptake has been similar to that faced by the mobile banking space over the past decade.

What is T-Banking all about?

T-Banking is about exploiting the television’s existing reach into households as a viable banking service delivery channel. The commercial applications that can be further built on top of this platform could enable users to perform T-Commerce activities such as paying for tele-shopping, making bill payments, et al.

The pre-requisites to offer T-Banking and T-Commerce are:

Set-Top Box(STB) infrastructure to offer TV media in any of the three prevalent modes: Conditional Access System (CAS); Direct-to-Home or Satellite TV (DTH) and IP-TV services (IPTV).

Secure MessageBroker infrastructure between STB and banking infrastructure.

The commercial angle

The interactive services arena has been bustling with activity, drawing into the fray media houses (such as Skytel in the UK, Tata Indicom and Hathway in India, Comcast in the US), software companies (such as NDS) and interactive content companies ( gaming) alike. In most parts of the world, CAS mode is largely one-way (from service provider to customer). DTH and IP-TV can enable two-way communication, albeit with some practical bandwidth restraints as-on-date. Regardless, banking services can be offered in each of these three modes.

Is there commercial sense in it?

Advanced geographies have progressed well in ensuring online connectivity to all nooks and corners in their world. Given the fact that most part of the developing world is yet to roll out online interconnectivity across geographical parameters, coupled with limited basic computer know-how in remote corners, online banking channel can be complemented by using the ubiquitous presence of television infrastructure.

The focus market for this delivery channel should be up-and-coming Asian geographies (such as India, China, and other countries in the sub-continent) which are perceived as more video-crazy when compared with their Western counterparts. This is further corroborated by some trends that showcase the potential of T-Banking and T-Commerce market, particularly for India:

India isthe third largest TV market globally of which 1 per cent customer base is digital TV (DTH and CAS)

Kagan Researchforecasts the number of digital cable households climbing to 2.2 million in 2009, or between 3 per cent and 4 per cent of all cable homes.

iSuppli predicts the number of digital cable subscribers will rise to 4.5 million, or slightly more than 7 per cent of all cable households, three years from now.

Whom does it serve and how?

T-Banking and T-Commerce is generally clubbed under a single bracket, but considering the Indian context, the following split may work out well:

T-Banking: SMEs/Proprietary firms operational from homes, housewives, Non-metro, under-banked segment.

T-Commerce: Metro/Cosmo population, need not be online banking customers, possess credit cards, high disposable income-levels.

Banks get a new delivery channel, particularly in the wake of two key limitations around existing channels. First, expansion of brick-and-mortar branch network follows licensing regime and not all banks have fair competition due to this. Second, online banking, which is the key competition to this channel, is still plagued by PC/Internet-dependency, while TV has better mass reach.

(To stress the difference, Internet banking depends on having a PC or some browsing mechanism. T-banking makes the bank accessible on Television sets.)

Tapping the opportunity

Today, most STBs support one-way communication with the service providers. Thus, certain basic account management features (account enquiries, local payments, self transfers, etc,) can be deployed on the T-Banking platform. The real value of TV media as a banking channel, however, will come about when

TV-Mail would mean extending SecureMail capabilities to TV media.

Hand-holdingbanking sessions with TV-based Relationship Management (face-to-face interaction), consumers will be able to see a living face on TV and talk on Phone to a scrolling number on the TV screen.

Virtually, there will be dedicated channels for banks enabled for T-Banking, just like entertainment content companies (such as ESPN, Star, Zee).

Risks and remedies

What are the channel adoption risks and remedies?

First, there is speculation that IP-TV will provide Internet access via TV interface, meaning that existing online banking capabilities will be automatically accessed via TV. But while the TV media may be offered on broadband cable infrastructure, ability to access internet sites via TV interface is not a reality today.

Second, the cable distribution system in the Indian subcontinent is complex and fragmented. However, respective governments are aggressively working towards organising this industry.

Third, there are infrastructural limitations today in cable space. Inquiry-type one-way banking services can be rolled out to start with. Subsequently, depending on market readiness for STB-upgrade plan from multiservice operators(with two-way communication capability), complex features can be planned.

Finally, there are concerns of consumer pricing, which have to be addressed jointly by banks and multiservice operators (MSOs) The key concern at this point is ‘channel adoption’.

The author is Senior Product Consultant, Finacle, Infosys Technologies.

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Your TV as your bank